Oil climbed near $45 a barrel after Algeria said OPEC may turn its informal talks next week into a formal session and as weekly industry data showed U.S. crude inventories declined.
November futures rose by as much as 2.5 percent in New York. OPEC ministers can transform the gathering into an extraordinary meeting since they will all be present, Algerian Energy Minister Noureddine Bouterfa said on public radio. Supply needs to be cut by 1 million barrels a day to rebalance the market and stabilize prices, he said. U.S. crude stockpiles dropped by 7.5 million barrels last week, the American Petroleum Institute was said to report Tuesday.
Oil has fluctuated since August’s rally on speculation the Organization of Petroleum Exporting Countries and Russia will agree on ways to stabilize the market at the meeting. While Venezuelan President Nicolas Maduro said members are close to a deal, all but two of 23 analysts surveyed by Bloomberg predict an agreement to limit production is unlikely. A deal to freeze output was proposed in February but a meeting in April ended with no final accord.
“History suggests that OPEC action is unlikely, but there will be talk and that will move the market,” said Evan Lucas, a market strategist at IG Ltd. in Melbourne. “The API data gave the market a boost, but prices are coming from a low base. Oil is moderating around the $44 to $45 a barrel level.”
West Texas Intermediate for November delivery rose as much as $1.09 to $45.14 a barrel on the New York Mercantile Exchange and was at $44.82 at 1:11 p.m. in Hong Kong. The October contract expired Tuesday after advancing 14 cents to close at $43.44. Total volume traded was 12 percent above the 100-day average.
Brent for November settlement rose as much as 69 cents, or 1.5 percent, to $46.57 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 7 cents, or 0.2 percent, to $45.88 a barrel on Tuesday. The global benchmark traded at a $1.65 premium to WTI.
U.S. crude stockpiles probably increased by 3.25 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Inventories at Cushing, the delivery point for WTI, probably rose by 100,000 barrels.
For a story on the possible outcomes from the OPEC meeting, click here.
OPEC will hold an informal meeting on the afternoon of Sept. 28 after the closing session of the International Energy Forum conference, Bouterfa said. Oil needs another six to nine months to stabilize within a range of $50 to $60 a barrel, he said.
Oil tanker Seadelta left Libya’s Ras Lanuf oil port loaded with 781,000 barrels of crude, heading for Italy, according to a port official. Petroleo Brasileiro SA reduced investments by 25 percent and is accelerating asset disposals as it downsizes to withstand low oil prices amid Brazil’s deepest two-year recession on record.